Sandoz shuts unit near Mumbai

August 20, 2012 14:53 IST

Sandoz, the generic arm of Swiss drug maker Novartis, recently closed its facility developing active pharmaceutical ingredients (API) near Mumbai, a person close to the development told Business Standard. This facility was part of the company's global development centre in India.

Novartis confirmed the move. In response to an e-mail query, Novartis India vice-chairman & managing director Ranjit Shahani said, "The decision was taken as part of a project portfolio optimisation within Sandoz Global Development."

According to the source, however, financial pressure on the parent company triggered the move. "The facility employed 50 odd people, and most of them were asked to look for jobs," he said.

Shahani maintained the impact on employees was minimised by redeploying people in other parts of the company here.

Sandoz Global Development in India employed around 200-250 people, of which 50, who were engaged in API development activities in Kalwa near Mumbai, were given three-months' notice in April, the source said. Although the company retained its formulation development activities and employees engaged in the same, the closure of API development in India happened around June-July, he said.

While Sandoz's API development activities from India are now consolidated into two other development centres in Europe, the company continues to have its presence in India through development, manufacturing and commercial operations in the formulation segment.

According to a trade source, Sandoz's popular brands in India include Calcium Sandoz, Adelphane, Curam, Ebutol, Rimactazid etc.

According to a sector analyst, though the move is astonishing as India is a low-cost destination for API development, in the case of Sandoz it may be relatively less significant as the company would be looking at captive use.

"Sandoz might have done a cost-benefit analysis which suggested the move," he said. "This could be because the company aims to focus on drug development and R&D in formulations. In that case, it makes sense for the company to even get API from others, it will save them a lot of energy and resources. Plus, the focus will remain on formulations."

Of the country's Rs 65,000-crore pharma market, 15 per cent is accounted for by API. Although over the last few years, increasing API imports from China has posed significant threat to the Indian API market, various drug makers like Dr Reddy's Labs, Cipla and Ranbaxy are still manufacturing both APIs and formulations.

However, many of these companies have reduced their focus on API as landed price for some Chinese APIs in India is less than their corresponding cost of production here.